Status of Corporate Governance Practices

Adaro Energy is fully aware and committed to implementing governance standards that conform to best practices including implementation within its subsidiaries. As part of our corporate culture, we engage and interact with all of our stakeholders in a way that promotes mutual trust, better understanding and good faith. In doing so, we are required to be transparent, accountable, responsible, independent and fair in all aspects of engagements with our stakeholders.

The main scope of Adaro Energy’s good corporate governance policies encompass; clear segregation of duties and responsibilities among the Board of Directors and Board of Commissioners, checks and balances, clear business roles and strategies within the Company and its subsidiaries, ethical business conduct, engagements with stakeholders through risk mitigation, and operational oversight by the Board of Commissioners through the Audit Committee and Internal Audit, upholding corporate social responsibility in sustaining good corporate citizenship as well as disclosure of material information in a timely and accurate manner.

One of the unique characteristics of Adaro Energy, when it comes to the ownership of most Indonesian listed companies, is that we are not owned and controlled by a single family. We are controlled by a group of 4 groups and individuals who do not have outright control. Given that each party is operating individually there is a natural system of checks and balances in place, and decisions are made with great consideration and after much debate. Additionally, this group of key shareholders is made up of the founders and past executives of PT Astra International Tbk, one of Indonesia’s most respected and well governed corporations.

In 2008, we became a public listed company, which has bolstered our level of corporate governance, particularly in our way of governing the corporate structure and engaging with our stakeholders. Adaro Energy takes into account existing regulations, best practices and corporate culture in exercising good corporate governance to ensure a smooth implementation. In 2009, we have made notable progress in expanding our good governance practices.

We established an audit committee in January 2009 as required by regulators. Furthermore, an internal audit unit was also established in the same period, which also fulfils Bapepam-LK regulation. Both of these units had formalized their charters to define their roles and serve as a guidance for best governance practices.

The key shareholders of Adaro Energy had restructured some of their holdings of stock of the Company into a single entity, called PT Adaro Strategic Investments, which directly owns 43.91% shares of the Company. This initiative was made in July 2009 to further increase the efficiency and cohesiveness of decision making and to strengthen the continuity and commitment of the key shareholders to create a bigger and better Adaro.